The first product I built was WeDeploy. It offered an easy way to deploy serverless-like applications, similar to Zeit Now, as well as a Data and Authentication plug and play services, similar to what Firebase has become years later. Both companies are incredibly competent in what they do, but it was not competition that prevented us from succeeding, it was something else.
During the development of the initial prototype, we knew the direction we wanted to go. Still, it wasn't evident how it would fit into the company's portfolio, or how we would monetize it at scale. One idea was to start a one-click SaaS selling of Liferay DXP product. At this point, Liferay was an enterprise Java company selling on-premise software, and the company wasn't ready yet for such a change. But a passionate vision drove us, and we continued the research. We did everything right:
- We've put the right people on the bus
- We've put the wrong people off the bus
- We've recruited the best engineers, designers, and product managers
- We've delivered in time
- We've attracted Innovators and Early Adopters
After a year we had 6,000 users. Not too bad, right? Wrong. What did we do wrong? The users were most on the freemium model and cheap paid plans.To monetize with this audience, we needed seven years.
Seven years is a long time with the number of expenses Cloud projects demand, so we had to do something. We got the investors in the room, and together we made a hard decision to stop the project.
Changing The Product Direction
One of the top-executives of Liferay sent me a message to suggest a book called Crossing The Chasm, stating it could help to understand the moment we were, and we are as a company. Here is when I had a revelation.
When we shutdown WeDeploy, the product was at an interesting phase:
- The product had some momentum with the Early Market
- The product was slowly transitioning to the Mainstream Market
- The technology we built wasn't bad
- Most importantly, we had the right people
It is essential to put the right people on the bus and the wrong people off the bus — and do it fast. Let me put it like this. When you travel with a good company, it doesn't matter if you head to New York or Vegas, you have fun either way.
I did want to take advantage of this momentum and the popularity of the existing product to continue and focus on what we were best at — the Enterprise world. I called another meeting with the investors and proposed to refocus the product and business strategy into enterprise customers.
This time, we recruited the best sales team we could to help to traverse the gap. We added new features that suited the enterprise market better, for instance: advanced backup and restore capabilities, CDN, and disaster recovery regions out of the box. And last but not least, I renamed and rebranded the company to Liferay Cloud, the product to DXP Cloud, and we gave it another shot.
The new direction started to show signs of success; I could smell it. Three months after the change, we acquired the first Enterprise customer, one of the biggest Telecom companies in Europe.
Accelerated growth can be just as dangerous as no growth at all. In some situations, the product grows quickly, and the company can't support fast growth. When that happens, it means you need to get more organized; working fast and loose may have been fine for your small team of superstars, but it doesn't work as well with a bigger group.
One crucial step to be ready for the Enterprise market is to get the product security certified. Customers or other stakeholders asked for an information security attestation — SOC or ISO. Both enable your organization to demonstrate that your operations and information security practices are sound. We've made this investment, and it was worth every penny. In less than two years, our organization has become ISO 27001 and SOC 2 certified and a multi-million dollar company.
Crossing the Chasm
Then there is no mountain,
Then there is.
When we shutdown WeDeploy, the product was precisely at this gap — the chasm. By the chasm, I mean, the gap that exists right after the product attracts a group of Early Market. Before reaching the group of the Mainstream Market, there is a gap, and it's where most companies fail to cross.
The Early Market group (16% of the market) is formed by adventurous people, without adequate money to spend. In contrast, the Mainstream Market (84% of the market) is a conservative group — to adopt new technology, they need several references and use cases from other companies, they represent the majority of the market, often they possess a higher budget to spend.
In hindsight, I realize I hadn't failed the first product completely; we were transitioning the gap and needed to adapt. With the new direction and the right sales team. We've crossed the chasm and created a profitable product.
Once a product achieves the Mainstream Market, the second year is decisive for the business. We are in the second year now, getting ready for the third and future years. Building a product is not a linear path; it requires persistence and a belief that the path leads somewhere. For that reason, I always try to remember The Hedgehog Concept from Good To Great book: the fox knows many things, but the hedgehog knows one big thing. More precisely, the Hedgehog Concept is a simple, crystalline concept that flows from a deep understanding of the intersection of Lesson 5.
What you are deeply passionate about.
What drives your economic engine— profit per x.
In the first year, the company is excited about the success but still humble, new logos acquired, sales numbers growing, company gathering is in a simple house in Big Bear.
The second year, investors get joyful, the company decides to invest in sales and marketing by hiring the cream of the cream, dinner meetings with customers happen very often now, expenses slope upwards, and company gathering this time is at a luxurious hotel by the beach.
In the third year — if things go well, the company starts hiring key talents (often more expensive but very productive), technical debt is one of the most significant OKRs. Still, you know, we have the new hirings to evolve the product nevertheless.
In the third year — if things go wrong, we realize we are too busy still implementing the features required by the first customers. The product has bugs; sales blame engineering and product lack of ownership, engineering defends by stating they didn't miss a single delivery accompanied by fancy Monte-Carlo estimations hit.
Keep things moving, learn how to create opportunities from failure, use the failure flywheel momentum to keep spinning. If your product is good enough to engage the Early Market, try to traverse the gap (the chasm) and be ready for the next slice of the market — the big guys. If you can do this, your business is in the right direction; if not, it can fail as do thousands of startups.